The Connecticut Business & Industry Association, the state”™s largest business organization, said respondents to a recent economic survey have an optimistic, yet watchful, outlook for the near future with business leaders anticipating an interest-rate hike by the end of the year.
The 2015 CBIA/Farmington Bank 3rd Quarter Economic and Credit Availability Survey found that more than 50 percent of business leaders expect an increase in interest rates by June 2016 and that 40 percent would see a somewhat negative impact on their firm if the Federal Reserve Bank raises rates either later this year or next.
“The economy is growing, however, the rate has been slow compared to our own long-term growth rate, and when compared to the U.S. average” said Pete Gioia, CBIAÂ vice president and economist. “Combined with the state”™s fiscal situation, it”™s clear we”™re at a critical turning point and lawmakers need to make decisions that will encourage growth, not hinder it.”
However, business leaders”™ outlook for their firms remains relatively optimistic, with most forecasting improvement or stability in the coming months, according to the association.
Specifically, 34 percent of respondents forecast improvement, the same as last quarter, while 48 percent expect their firm to remain stable, compared with 52 percent last quarter.
Only 17 percent expect a decline, up slightly from 13 percent last quarter, the survey data said.
Of those surveyed, 23 percent are hiring and 60 percent plan to remain stable in their workforce. But 16 percent anticipate downsizing over the next few months, compared with 10 percent last quarter.
The survey also found 31 percent of survey respondents have used credit in the last three months to meet their financing needs.
The respondents noted using financing to cover the costs of capital investments (58 percent), mainly to improve production or sales, trim operational costs and/or invest in technology.
Key findings include:
- 83 percent of respondents report that credit availability is not a problem;
- 94 percent report no changes in lending terms; and
- 31 percent consider Connecticut”™s lending climate good or excellent, 50 percent consider it average.
The survey also cited the Farmington Bank Credit Availability Index, which addresses the health of Connecticut”™s credit markets.
This quarter, the index showed a clear upturn in current conditions and future expectations with a rating of 61.1, up from 57.4 last quarter.
The 2015 survey was emailed to 1,500 Connecticut business leaders in September and October. A total of 210 responded, for a 14 percent response rate and a margin of error of +/- 6.9 percent.
